100% Bonus Depreciation Is Permanent Again: What It Changes for 2026 Equipment Buys

For the last few years, every equipment purchase came with a stopwatch on it. Bonus depreciation was phasing out — 80%, then 60%, on its way to zero — so the question was always “do I buy now or lose the deduction?” That stopwatch is gone.

The One Big Beautiful Bill Act brought back 100% bonus depreciation and made it permanent for qualifying property acquired and placed in service after January 19, 2025. No phase-down, no expiration, no cliff. For the first time in a while, you can plan equipment purchases two and three years out without the deduction shrinking on you.

What 100% bonus actually does

It lets you deduct the full cost of a qualifying asset the year you put it to work, instead of spreading it over five or seven years. Buy a $40,000 machine, place it in service, and the whole $40,000 hits this year’s return. Not $8,000 a year for five years — all of it, now.

Qualifying property is broad: tangible personal property with a recovery period of 20 years or less — machinery, equipment, furniture, computers — plus certain interior improvements to nonresidential buildings. And it covers used equipment, not just new, as long as it’s new to you and bought at arm’s length.

The date that decides it

One trap. The 100% rule only applies to property acquired after January 19, 2025. Sign a binding written contract dated before that, and the purchase falls under the old phase-out schedule — even if the equipment didn’t show up until months later. The contract date controls, not the delivery date. If a purchase is anywhere near that line, pull the paperwork before you count on the full deduction.

Bonus vs. Section 179 — not the same tool

People use these interchangeably. They shouldn’t. Section 179 also expenses assets up front, but it has guardrails: for 2026 it’s capped at about $2.56 million, it starts phasing out once your purchases pass roughly $4.09 million, and it can’t drive you into a loss — it stops at your business income.

Bonus depreciation has no dollar cap and can create a loss. So they work together: use Section 179 to cherry-pick exactly which assets to expense when you’re fine-tuning income, and let bonus depreciation sweep up the rest. Which mix is right depends entirely on what you’re doing with this year’s income. That’s a planning decision, not a default.

Don’t let the tail wag the dog

Here’s where people get burned: a 100% write-off is not a reason to buy something you don’t need. A deduction lowers your taxable income — it doesn’t cut your tax bill dollar-for-dollar. Spend $40,000 on that machine and you might save $12,000–$15,000 in tax. You’re still out the other $25,000-plus. If you wanted the machine anyway, the deduction is a nice discount. If you didn’t, you just spent $40,000 to save $13,000. That’s not a strategy. (More on that math trap in Viral Tax “Hacks” That Quietly Trigger Audits.)

Where it does pay off is timing. High-income year, and a real equipment need coming in the next few months? Pulling the purchase into this year can be worth real money. Just make that call on purpose.

This article is general information, not tax advice. Depreciation choices depend on your income, your entity, and how your state conforms to the federal rules — let's look at your specific situation before you file.